Mortgage Insurance and the 20% Rule
Private Mortgage Insurance is usually required if you put down less than 20% of the selling price, unless you qualify for a VA loan. And even a VA loan will require an upfront fee as a type of insurance. You may be able to find a bank that doesn’t require PMI (Private Mortgage Insurance), but you’ll probably be paying a higher interest. PMI is usually required because the bank is insuring themselves, and you, if you start missing payments. If you put down at least 20%, then they feel you have more financial security, so they are not as “concerned”, if you will. It is definitely worth it to put down the 20% if you can.
I know that is hard and not possible for most people. I definitely had to have PMI when I owned my home. As soon as you reach 20%, you can call them and let them know that you don’t need it anymore. You can keep track as you see your statements or look at your progress online with your mortgage company. Multiply 0.2 by your loan amount and that will be the principle you’ll have to have paid off to get rid of your PMI.
PMI will get added to your mortgage statement, along with homeowners insurance and property taxes (if you wish), so you don’t have to worry about paying these on your own/separately.
The length of time you’ll need to have MI depends on the percentage of the loan you put down and the interest rate. Included is an amortizing calculator to help you make some estimates for your monthly payments.
https://www.usbank.com/home-loans/mortgage/mortgage-calculators/mortgage-payment-calculator.html
Then, your future mortgage website should have a link for you to see the amortized schedule for YOUR loan. It is a LONG list of your payments over the course of the months and years, called the amortized schedule and it will show you the interest you have paid off and the principal you have paid and still have yet to pay off. It shouldn’t deter you from ownership, as ownership is very valuable, as you know.
The cost of MI can vary greatly. It is dependent on the assessed value of the dwelling and your credit score mostly. The cost does vary greatly and the less expensive one is just fine.
Included is an article that can further shed light on PMI. Also, a "first time homebuyer" is one who has never owned before OR who hasn't owned in over 3 years.
https://www.rocketmortgage.com/learn/what-is-pmi
One quick note about the current interest ratesss$$$ and money down
Yes, interest rates have been higher in the past year than they were previously for a good 7-8 year. Did you know that interest rates used to be in the teens back in the 80's? I'm not saying this to say don't be so choosy, but it really could be worse :)
https://themortgagereports.com/61853/30-year-mortgage-rates-chart#historical
SO the quick message here is that while they are a tad higher than they were a year ago, the upshot of that is that home prices are down. So you can buy with the lower price and #1 the lower cost of the house and the higher rate may even out to about what you might have been paying a year ago. Then #2, you can refinance when the rate goes down, and that is very likely in the next year or two. You can refinance to secure that lower rate and perhaps even readjust your monthly by setting it back to the 15, 20, or 30 years you probably originally had so that it is more spread out.
There are also different buydowns you can do where you can get credit towards a down payment or buy interest points so that they get lowered right away. There are ways to afford a house, even if your savings account is not huge. Give me a call and I can set you up with a mortgage officer who can let you know your options!
About me
I am a former high school Math teacher of over 20 years. I taught all of the math classes in those years and always enjoyed it. Truly. Now, though, I am a realtor ready to serve you and your real estate goals and desires, knowing what a sensitive matter that can be. I am a single mom by choice with two little boys, who are the greatest joy in my life.
Fun fact: Before I had kids, I trained in circus arts, doing aerial silk tissue. I even performed at DNA Lounge in SF on a regular basis ha! That was so fun and kept me out of trouble, what with the rigorous training I did alongside teaching. Now I cook and clean a lot, and be with my kids as much as possible. I recently learned how to make sourdough bread. I enjoy giving out my starter and helping friends make their first loaf. I can help you, too?!
I have long thought that being a real estate agent would be my next career. I owned a house, until recently, and I did a LOT of work on it. I know the trials and love one can have for a house, as well as tenant issues that can arise. I love houses, helping people, and getting personal. I also enjoy being active and “out and about”, as they say, so I’m so excited to be starting this new chapter and help you realize your real estate goals and desires!
Bay Area Realtor
Tara Shakeshaft
DRE#02226541
Abio Properties
tarashakeshaft@instagram
Tara Shakeshaft on Facebook
#electricblueagent
https://www.youtube.com/channel/UCzvFF6FPCrCRLTvOA-ywRBA
(510)316-3820
What's a realtor good for anyhow, except for collecting a huge check at the end?
What is an agent good for anyhow, except collecting a huge check at the end? First off, you should know that the commission gets split by 4 parties. It goes to the selling agent, selling broker's office services, buying agent, and buying broker's office. The offices and staff in the offices play a key role in helping the agents with documents, organization, legal matters, holding money, supporting the agents by giving and organizing the tools and computer programs, training agents, meetings with everyone, marketing homes, and basically providing a quality and proactive experience for YOU, the principals! The industry is always changing (new laws, documents, etc), so it is important to have an agents that are well supported by their brokers.
I thought about the "huge, inflated" commission in the back of my mind when I was getting ready to sell my house a year ago, before I was a realtor. I was quite busy with MY list of to-do’s like getting my house up to snuff. I spent tens of thousands of dollars. I was also buying new hardware for the kitchens, painting what I could myself, dragging my kids to Home Depot to buy bricks and more bricks, going to the dump weekly for probably 2 months (my kids loved that and we made HD trips fun too), and the list goes on and on. I had to evict stubborn tenants, then pay them AND lawyers. It was a crazy time. I asked my realtors to help me with manageable things and they delivered, as I was fairly ragged at times. So I get it. I can help you, too, with many things.
Selling or buying a house is a huge, legal and financial transaction and a trusted realtor can help you. Here is a list of to-do’s the selling agent will do for you. Yes sometimes a house won’t need work, or it sells in one weekend, but there is still a LOT that goes on leading up to that weekend and after that weekend. A lot could not go perfectly. Some houses take months to get a decent offer. But your realtor will stick with you in humble manner until the end, and then follow up after.
-Real estate agents should have contacts for contractors like painters, plumbers, and tile work.
-Contacts for inspections (house and pest) and may offer to do the calling and set up the time.
-Make prudent attempts to fix some or all problem spots that may alert the home inspector to avoid certain topics to show up in the report that will be provided to the buyers
-They need to be present for those inspections.
-An agent will give sound advice on what improvements could be made that would really help the sale price, colors (hint: white and beige).
-Help guide you and get you started on disclosure documentation
-Have contacts and completely arrange for the staging of the home.
-Arrange for cleaners to come, let them in.
-Conduct a Comparative Market Analysis (CMA) so to let owner know what their home may be worth and for the houses priced above theirs, they may see more clearly upgrades they can make to their home to make it shine a little brighter.
-Research and verify legal description, public record of lot size and dimensions, ownership and title, land use code and any deed restrictions.
-Look at schools in area and be able to talk about their worth.
-Explain how we will market the house to our fullest potential
-Be on call for questions and concerns
-Open houses--QR codes posted for info on house, flyer given to each visitor with surrounding attractions and a map to go with, treats, letter from seller about the value of the house to them put in a frame, making sure front is swept and toilets flushed , keeping track of visitors and following up if any interest was given, and the list continues on that front
-Neighborhood tours on the weekday
-Making sure all legal points like fire alarms or certain window security gates are present or not, depending.
-Arrange and be present for appraisal.
-Arranging for staging the home, be present for it’s installation and probably involved.
-Arrange for pictures to be taken after this, be present for it, then use them for the MLS (Redfin, etc) and all flyers for open houses and other marketing options.
-Discuss possible bridge loan if sellers move out, but need money to do this.
-Sewer Lateral legal issues and helping to get an estimate to update, or getting confirmation that it is completed.
-Obtain current loan information
-Lock box installed and extra keys made
-For sale sign installed
-If sellers don’t move, then a lot coordination between buyers agents and sellers agents and occupants will need to be made so that occupants/sellers can have warning to clean and be ready for visitors.
-Printing of flyers to hand out and A-frame signs.
-Placing the A-frames around the neighborhood, then picking them up after an open house.
-Counsel sellers on countering “offers” and work with parties to negotiate a deal.
-As offers come in, a lot of expertise on price and what offers look most promising based not just on price, but % of money down, lenders they are using, info about buyers agents that may affect outcome or process.
-After offer is accepted by both parties with signatures present and everyone notified of acceptance, coordinate closing dates with all parties, including the lender and title company.
-Final walk-through date arranged with buyer
-Forward verified closing figures to buyers with prorated costs included
-Update MLS listing to SOLD, selling price, etc
Now this list is not exhaustive, as there are many smaller activities that go on. But hopefully you get the idea that it requires a lot of organization by both the agent and the broker’s office to help keep track of some documents, provide certain services, and other legal tasks.
Then there is the buyer’s side. The buyer doesn’t pay any commission. Of course you may have been privy to the news that that is starting to change, or be negotiable. We can talk more about that. The buying agent typically makes less commission, as a percentage, than the selling agent. The two brokerages also get a slice of the commission as they are crucial partners with the agents to keep track of the myriad of documents, holding the down payment money, help with marketing, etc. The selling agent generally does more, as you can see. BUT the buying agent does a lot, too. Here is a list of to-dos for the buying agent that again is not exhaustive. There are always extra things to consider and do.
-Prepares a list of homes you may like based on your conversation and listening to you.
-Has the legal capacity to show you the house on non-open house times.
-Should look at the disclosures and ask questions to the seller side about fixing or negotiating on price.
-Ensures that typical disclosures are presented, like for lead, have been given.
-Gives advice on offering price and any contingencies, then prepares the contracts that then get sent out.
-Can arrange for financing
-Arranges inspections and is present for them.
-Another appraisal is done and present for it.
-Looks at any title issues and can arrange for title insurance if needed.
-Makes sure that closing procedures are being followed.
-Bring earnest money and/or deposit money to their brokerage and they hold it in an escrow account until closing or if sale is cancelled for some reason.
-Again, like the selling agent, the two agents are in communication, but each is bound to fiduciary duty to the principals.
Dual agency sometimes occurs when the selling agent is also the buying agent, but that will accompany a document, disclosure, and approval by both parties.
Without a competent and attentive buyers agent, a deal could fall apart and the seller’s damages will far exceed the cost of the buyer’s agent commission. It is a huge deal to transfer a house, where opportunities to sue the other party down the line are very real if things are not done right.
Yes, some agents make more than decent money. Most, though, bring in an average income as it takes a lot of time to market yourself and be good at it. Agents take a lot of pride in serving you and your family in good times and bad times. They almost literally invest in your success and desires to help your house make a profit in good times or just sell most easily after a loved one passes as the family is grieving. We are here to help with one of your most precious commodities and make the process go smoothly for you as you continue with your daily life.